Greek Deficit Grows
The Greek Government is still struggling to run a neutral monthly budget according to the Current Account deficit reported for April. The deficit for the month has come in at -€1.167Bn year on year, this follows on from a near flat reading of -€0.044Bn in the month of March.
There was no real expectations for a turn around in the Greek current account deficit for the month, likewise there was no real danger of this dramatically worsening, the EU/ECB/IMF bail out team has ensured that short term budgetary balances remain confined to a tight range in this struggling economy.
Despite the austerity measures being imposed by the bailout Troika there are still positive economic projections beginning to surface around Greece’s recovery prospects. GDP continues to contract within the Greek economy, but the rate at which this is occurring is noticeably slowing and forecasts would suggest that moderate expansion will likely be reported towards the end of this year.
Regardless of the fact that unemployment stubbornly persists around the elevated 27% level there are signs that consumer spending is starting to pick up. Recent consumption data showed a year on year increase of just shy of 1%. This is important, all developed economies that have so far entered a recovery cycle following the economic crises have done so through consumer led growth.
Greece is also not on it’s own in terms of suffering from underinvestment at the current stage of the recovery. Most developed economies are now realizing that consumer led growth provides for the beginnings of recovery but does not lead to sustainable growth. In this respect Greece has done well to recently sign a €5Bn investment deal with China, this package also includes trade pledges and a promise to subscribe to Greece’s next debt issue by the world’s second largest economy.
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